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Self-administered pensions can lend via ‘P2P’ platform

Holders of self-administered pensions will be able to invest in so-called peer to peer (P2P) lending to Irish SMEs under a new scheme launched by Linked Finance.

The company said its new accounts had been developed in conjunction with pension trustee companies so that they meet the typical requirements associated with the most common self-managed pension products on the Irish market.
Linked Finance is a P2P lending platforms that essentially matches borrowers to investors with funds.

The model has grown in popularity internationally in the aftermath of the financial crash, when many small firms struggled to access credit while at the same time investors have struggled to generate returns. The company said it is typically delivering net returns of between 7pc and 8.5pc on SME loans.
Linked Finance said its pension accounts will allow holders of existing self-administered pensions to lend through its platform, allowing users to avail of tax benefits associated with investing through a pension plan.

To be able to lend on the platform, pension accounts must be administered by a participating trustee company.
This list currently includes Wealth Options, Bespoke Trustees, Quest Capital and the Independent Trustee Company. Linked Finance intends to expand the number of participating companies in 2018.

Linked Finance has 17,000 registered users and has raised €40m in funding for 1,100 loans to Irish SMEs since it was established.
In P2P lending the platform can help match those with funds to those who require cash directly, unlike traditionally banks which act as intermediaries by pooling savings to fund loan activity.

But it means that loan investors are on the hook for losses if their borrower defaults.

Earlier this year, Linked Finance raised €2m in equity funding to support its plans for expansion.

The funding round was led by the company’s original venture capital backers, Frontline Ventures, who were joined by a group of 28 individual investors, all of whom are active lenders on the Linked Finance platform. It recently appointed former Ryanair deputy CEO Michael Cawley as its chairman.